Mortgage Readiness Notes

A neutral overview of what a mortgage underwriter generally reviews in a self-employed borrower's file. Requirements vary by lender and loan program, so treat this as orientation, not a checklist from any specific lender.

Income documentation

Underwriters look for a stable, documented income history. For self-employed borrowers this typically means tax returns with their schedules, and sometimes a year-to-date profit and loss statement. They generally focus on net income after business expenses.

Tax transcripts

Lenders commonly ask the borrower to authorize a transcript request from the IRS so the figures on the returns can be confirmed against the IRS record.

Bank statements

Statements show where money comes from and goes. Underwriters review recurring deposits, large or unusual deposits that need a written explanation, and whether account activity is consistent with the income reported elsewhere.

Debt obligations

Monthly debt payments are compared with income to produce a debt-to-income ratio. Installment loans, revolving accounts, and other recurring obligations are all considered.

Reserves

Reserves are liquid assets remaining after closing. Many programs require a number of months of housing payments in reserve, and self-employed borrowers are sometimes asked to show more.

Public resources

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